FABM 1 Chapter 2 Review

This branch of accounting focuses on catering to the information needs of external users.

• Management Accounting

• Financial Accounting

• Auditing

• Tax Accounting

These users need accounting information in order to regulate businesses that are within the scope of their legal authority.

• Employees

• Creditors

• Investors

• Government Regulatory bodies

These users need accounting information in evaluating the stability of the business in so far as their job security, future remuneration, and career growth and opportunities are concerned.

• Employees

• Creditors

• Investors

• Government Regulatory bodies

The following are decisions made by external users except

• whether to hold or sell investments in stocks

• whether or not to extend a loan to the business

• whether to sell goods on credit to the business

• whether to obtain additional capital from outside creditors or to generate it internally

Which of the following users of financial information is not considered a creditor of the business?

• A loan provider, such as a bank

• A supplier that sells goods to the entity on credit

• A customer that buys goods from the entity on credit

• A financing company that provides the entity with machineries on a “rent-to-own” basis

It is the branch of accounting that involves the careful analysis of economic events and other variables to understand their impact on decisions.

• Accounting education

• Cost accounting

• Accounting research

• Tax accounting

It is the process of objectively evaluating evidence and expressing an opinion regarding the correspondence between management’s assertions and established criteria.

• Accounting education

• Auditing

• Accounting research

• Tax accounting

It refers to the accounting for the government and its instrumentalities, focusing attention on the custody of public funds, the purpose or purposes to which those funds are committed, and the responsibility and accountability of the individuals entrusted with those funds.

• Cost accounting

• Auditing

• Government accounting

• Tax accounting

This branch of accounting involves teaching accounting, taxation, and other business-related subjects.

• Cost accounting

• Auditing

• Government accounting

• Accounting education

This branch of accounting is mainly intended to provide information needed by internal users.

• Cost accounting

• Management accounting

• Government accounting

• Accounting education